The average used vehicle prices have risen by 35% since 2021. But considering that the overall cost of a new car has increased by $13,000 since 2018, many find that buying good value pre-owned vehicles is still a better financial decision.
There's no denying that buying a brand-new car has numerous perks. Besides the good feeling of being the first owner and driving off with a spotless new vehicle, you can also get an extended warranty and be relatively sure that the car won't fail during long trips.
Still, savvy buyers that learn to analyze vehicle history reports and manage to get a good agreed-on sales price with the seller can often come out ahead financially while still getting a reliable car they can use for a long time.
But does buying used cars make sense for you? What are the advantages of used cars? What are the drawbacks? And where to buy one?
Let's explore these and other important questions below.
Pros & Cons of Buying a Used Car
For most people, having a car is not an option. It's just an essential part of day-to-day transportation. But whether to buy a new or used car remains open for debate, with advantages and disadvantages to both approaches.
To help you decide whether buying pre-owned vehicles is a good option, let's examine some of the main pros and cons you should be aware of.
Advantages of Buying a Used Car
Here are some advantages you will enjoy when buying used cars from auto dealers or a private party.
Even though used car prices have been rising in the past few years, the exact price you pay for the vehicle options you can get will always be lower when buying used cars over new ones.
And the truth is, the tide for used cars is actually turning, with used car prices going down in recent months. That means those who make a used vehicle purchase now will be in a great position to enjoy even more considerable savings than when purchasing new vehicles.
In practice, that can mean having to put down less upfront, paying less every month on loan payments, and even having more flexibility with your finances at current times that are becoming harder to predict.
You Can Get a Higher-End Vehicle
One of the best things about buying a used car is that you can usually expand the range of vehicle options you can consider. Because even 1-3-year-old model vehicles cost significantly less than new ones, you can afford a more luxurious car that's still in excellent condition.
If you would buy a new one, you may have to settle for reliable but non-luxury brands like the Honda CR-V. Meanwhile, if you buy a used car, you might be able to buy a Lexus, Volvo, or Mercedes-Benz, depending on the condition levels you are willing to consider.
Better Resale Value
One of the biggest issues with buying a brand-new car is that it will lose a significant part of its original value the minute you drive off from the dealership. Even a virtually new car will never fetch the original price it was first worth, so new car owners simply have to write off that loss as part of the purchase.
However, when you buy a used car, you don't have to worry about these types of issues because once the vehicle becomes used, the decline of its value slows down quite a bit.
Sure, it will still depreciate over time, especially as the mileage increases after the vehicle purchase. However, you can still get back a big part of the amount you paid, especially if you maintain the car and avoid serious accidents.
Better for the Environment
One factor that few people consider when deciding between a new and a used car is the environmental impact. Most are aware that newer cars are usually more eco-friendly, but they fail to consider that producing that new car releases a massive amount of CO2 as well.
Because of that, buying a used car that's still in good condition can actually be good for the environment. By extending the car's lifetime, you are reducing the number of additional vehicles that need to be made, saving resources and preventing toxic waste from accumulating.
Don't Have to Wait
Recent new car shortages because of the lack of components to make them has resulted in most new cars requiring people to get on a waitlist. For example, buying a 2022 Mercedes-Benz EQS will not only set you back six figures but might also require you to wait for it to be made and delivered for up to half a year.
Meanwhile, when you buy a used vehicle, such as the 2017 Mercedes-Benz C 300 coupe, you can get the car as soon as you finalize your purchase.
Disadvantages of Buying a Used Car
Now that we've looked at some of the main advantages of buying used cars, let's examine why buying a used car from a private party or dealership might be the wrong choice in some situations.
Increased Risk of Issues
No matter how reliable the vehicle manufacturer you choose might be, most used cars will eventually start running into issues, such as unusual noises, performance problems, or even failure of critical components.
Even if you buy a certified pre-owned car, you still have to be open to the possibility that you will need to invest in repairs to keep it in good condition sooner rather than later.
And you won't enjoy the factory warranties that new vehicles come with, so you'll usually need to pay for a mechanical inspection and repairs yourself.
More Expensive Financing
A big part of getting good financing for a car comes down to the dealership feeling confident that the vehicle will maintain its value during the loan period. On top of that, dealerships receive bonuses for selling new cars from the manufacturer, which further incentivizes them to offer reasonable rates.
Meanwhile, with a used vehicle, the dealership takes on more risk, so they might need to adjust the financing rates to compensate, making adjustments for vehicle mileage and other important factors.
More Complicated Buying Process
There are many ways to buy a used car. You can go to a dealership, and the process will be more or less the same as buying new. But if you want to save some more money, you will likely look at private sellers as well, which can offer more vehicle options and better deals.
But when you work with private sellers, various additional issues might arise. For example, the person you deal with might need to sell the car without the owner being present, which can complicate things and create additional steps.
Another reason why buying from private sellers might be a hassle is having to manage your and their expectations. Most sellers who list their cars privately avoid selling to a dealership because they don't want to get less money than the car is worth. But that also means they might overvalue how much they can get, making them inflexible to reasonable offers from buyers like you.
Where to Buy a Used Car
As mentioned before, there are many possibilities for buying a used car.
The most straightforward and hassle-free option is to go to a local dealership. If you buy a certified pre-owned car, you can remove many risks and get warranty coverage. However, these types of vehicle options can typically be costly, so you need to evaluate if they fall within your budget.
There's also a wide range of options in the private seller market, so you can explore the available options there. You can find a variety of vehicles at all price points, but buying from private sellers requires you to be more thorough in evaluating the listed cars.
When dealing with a private seller, always ask for mileage, and all available service records, and, ideally, see the car in person. You will want to look for the obvious warning signs, and evaluate if the vehicle is worth the risk for its listed price.
How to Get the Best Price
If you find that a car you like has a higher price than you're willing to pay, don't be quick to dismiss it. You might be able to get the price down to what you can afford if you are willing to ask for it.
There's usually quite a bit of room for negotiating when buying from private buyers. For example, if you spot issues during the inspection, you may use them as negotiation leverage, asking the seller to drop the price to compensate you.
In dealerships, you can knock off a chunk of the price as well. Sometimes, dealerships will overprice the car and then offer a discount if you ask for it, so you should at least try to get a better deal before accepting the listing price. They might be even more willing to lower the cost if the car has not sold for a long time, as it's taking the room of cars that might be more popular among buyers.
Buying used cars can provide you with a variety of vehicles to choose from that might be out of your budget when brand new. However, there are also plenty of risks that come with buying used cars, especially when dealing with a private party seller.
If you decide to explore the used car market, make sure you thoroughly inspect the vehicle, look into the possibility of getting warranty coverage, and try to negotiate the price to compensate for some of the risks you will have to take.